Sabran v. Rockhill Ins. Co.

558 F.Supp.3d 1203

Ira SABRAN and Barbara Sabran, a/a/o 2203 Regal Way LLC, Plaintiffs,

v.ROCKHILL INSURANCE COMPANY, Defendant.

Case No: 2:20-cv-803-JLB-MRM

United States District Court, M.D. Florida, Fort Myers Division.

Signed September 7, 2021

Charles P. Pearson, Dale Scott Shelton, Shelton Law, PLLC, Tallahassee, FL, Jeffery Remington Huggins, Huggins Law Firm, Roswell, GA, for Plaintiff Ira Sabran.

Charles P. Pearson, Shelton Law, PLLC, Tallahassee, FL, for Plaintiff Barbara Sabran.

Danielle N. Robinson, Marshall, Dennehey, Warner, Coleman & Goggin, Ft. Lauderdale, FL, Irene Thaler, Clausen Miller, Tampa, FL, Michael A. Packer, Marshall, Dennehey, Warner, Coleman & Goggin, P.C., Jacksonville, FL, for Defendant.

ORDER

JOHN L. BADALAMENTI, United States District Judge

Plaintiffs Ira and Barbara Sabran (together, "the Sabrans") are the purported assignees of a claim for coverage under a homeowner's insurance policy issued by Defendant Rockhill Insurance Company ("Rockhill") to 2203 Regal Way LLC ("Regal"). Rockhill denied Regal's claim for coverage under the policy for storm damage to the insured property allegedly caused by Hurricane Irma in 2017. Regal assigned its claim for insurance benefits to the Sabrans, who then sued Rockhill in Florida state court for breach of contract. Rockhill subsequently removed the suit to federal court. Rockhill asks this Court to dismiss the complaint, contending that the Sabrans lack standing because Regal's assignment of insurance benefits to the Sabrans was invalid under Florida Statute § 627.405 and the policy's anti-transfer clause. As discussed below, Rockhill's motion to dismiss (Doc. 6) is DENIED .

BACKGROUND

The insurance policy was in effect when Hurricane Irma allegedly caused storm damage to the insured property in September 2017. (Doc. 1-1 at 3, ¶¶ 9–11; Doc. 3-1 at 2.) Regal submitted an insurance claim to Rockhill, which Rockhill denied on March 29, 2019. (Doc. 1-1 at 3, ¶¶ 12–13.) On April 30, 2020, in connection with the sale of the insured property and without Rockhill's written consent, Regal executed an assignment of benefits ("AOB") to the Sabrans, assigning:

all right, title and interest in and to the Claim, and all claims, demands, cause(s) of action of whatsoever kind and nature, as well as the rights to any and all benefits, proceeds or damages arising therefrom, that [Regal] has had, now has, or may have against [Rockhill] as it relates to the Claim ...."

(Id. ¶ 14; Doc. 3-1 at 2.) After this assignment, the Sabrans submitted a claim for the loss to the Regal property to Rockhill. (Doc. 1-1 at 4, ¶ 16.) On July 29, 2020, Rockhill again denied the claim to the Regal property. (Id. at 4, ¶¶ 16, 20.)

On September 9, 2020, the Sabrans filed a complaint alleging breach of contract against Rockhill in Florida state court, to which they attached the AOB and the policy. (Doc. 1-1.) Rockhill subsequently removed the action to this Court on October 12, 2020. (Doc. 1.) Two days later, Rockhill moved to dismiss the complaint under Federal Rules of Civil Procedure 12(b)(1), (b)(2), and (b)(6), arguing: (a) the Sabrans lack standing because they have not suffered an injury in fact; (b) the policy's anti-transfer clause bars the AOB; (c) Florida Statute § 627.405 (2017) bars the Sabrans from maintaining this action; and (d) the Sabrans cannot cure their lack of standing now that the lawsuit has been filed. (Doc. 6.) The Sabrans timely responded. (Doc. 13.)

LEGAL STANDARD

Rockhill moves to dismiss the complaint under Federal Rule of Civil Procedure 12(b)(1), 12(b)(2), and 12(b)(6). When a motion turns on multiple grounds, a court should consider the jurisdictional challenges first. See Steel Co. v. Citizens for a Better Env't, 523 U.S. 83, 88–89, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998). To have Article III standing, a plaintiff must show he "(1) suffered an injury-in-fact (2) that is fairly traceable to the defendant's conduct and (3) is redressable by a favorable judicial decision." MSPA Claims 1, LLC v. Tenet Fla., Inc., 918 F.3d 1312, 1317 (11th Cir. 2019). Moreover, in a diversity action involving a contract, state law determines whether a plaintiff has a legally protected interest for Article III purposes. See Ave. CLO Fund Ltd. v. Bank of Am., NA, 709 F.3d 1072, 1077 (11th Cir. 2013)

Rule 12(b)(1) motions can raise factual or facial challenges. See McElmurray v. Consol. Gov't of Augusta-Richmond Cnty., 501 F.3d 1244, 1251 (11th Cir. 2007) (internal citations omitted). A facial attack challenges a court's jurisdiction without disputing the facts alleged in the complaint and requires the court to treat the complaint's allegations as true. Id. (citation omitted). In contrast, a factual attack challenges "the existence of subject matter jurisdiction in fact, irrespective of the pleadings, and matters outside the pleadings, such as testimony and affidavits are considered." Id. (citation omitted). In assessing a factual challenge, no presumption of truthfulness attaches to a plaintiff's allegations. See Lawrence v. Dunbar, 919 F.2d 1525, 1529 (11th Cir. 1990) (quoting Williamson v. Tucker, 645 F.2d 404, 413 (5th Cir. 1981) ). Rockhill raises both factual and facial challenges.

Further, to survive a motion to dismiss under Federal Rule of Civil Procedure 12(b)(6), a complaint must "contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ). Reasonable inferences from the factual allegations are to be construed in the light most favorable to the plaintiff. Id.; see also Bryant v. Avado Brands, Inc., 187 F.3d 1271, 1273 n.1 (11th Cir. 1999). A party must plead more than "labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555, 127 S.Ct. 1955. A court's consideration of a Rule 12(b)(6) motion is limited "to the pleadings and exhibits attached thereto." Grossman v. Nationsbank, N.A., 225 F.3d 1228, 1231 (11th Cir. 2000) (citation omitted).

DISCUSSION

Each of Rockhill's arguments turns on whether the Sabrans had a valid assignment. Rockhill first notes that the policy contains specific provisions requiring Rockhill's written consent before any valid assignment of rights and duties under the policy. (Doc. 6 at 4.) Rockhill next argues that Florida's common law prohibition against such provisions is inapplicable because Rockhill is a surplus lines insurer. (Id. at 8–11.) Absent Rockhill's written consent to the assignment, Rockhill reasons, the Sabrans lack a valid assignment, an injury-in-fact, an insurable interest under Florida Statute § 627.405, and standing to maintain this lawsuit. (Id. at 7, 12–13.)

Turning to the text of the insurance policy, the insurance policy provides:

T. Assignment

Assignment of this policy will not be valid unless we give our written consent.

....

21. TRANSFER OF YOUR RIGHTS AND DUTIES UNDER THIS POLICY

Your rights and duties under this policy may not be transferred without our written consent except in the case of death of an individual Named Insured.

(Doc. 1-1 at 28, 62.) As will be explained, however, courts applying Florida law routinely find such language unenforceable because an insured's post-loss assignment of benefits does not require the insurer's consent.

Further, a valid assignment can impute to the assignee the requisite injury-in-fact and insurable interest if the assignor met those requirements at the time of loss, not at the assignment of benefits. See MSPA Claims 1, 918 F.3d at 1318–19 (finding assignee adequately alleged concrete injury-in-fact required for Article III standing because assignment was valid) (citing MSP Recovery, LLC v. Allstate Ins. Co., 835 F.3d 1351, 1357–58 (11th Cir. 2016) ); Accident Cleaners, Inc. v. Universal Ins. Co., 186 So. 3d 1, 3 (Fla. 5th DCA 2015) (finding assignee satisfied the insurable interest requirement of Fla. Stat. § 627.405 when assignor who met the insurable interest requirement at the time of loss properly assigned right to sue insurer thereafter). Accordingly, because Rockhill does not contend that Regal lacked the requisite injury-in-fact and insurable interest, Rockhill's motion turns on whether the AOB is valid.

I. Post-loss benefits are assignable

A. The common-law right of assignments in Florida

"All contractual rights are assignable unless the contract prohibits assignment, the contract involves obligations of a personal nature, or public policy dictates against assignment." Kohl v. Blue Cross & Blue Shield of Fla., Inc., 988 So. 2d 654, 658 (Fla. 4th DCA 2008) (citation omitted). By statute, an insurance policy "may be assignable, or not assignable, as provided by its terms." Fla. Stat. § 627.422.

But, under Florida's common law, the terms of the insurance policy and insurance-related statutes do not end a court's analysis when evaluating the propriety of a post-loss assignment. This is because an insured may assign a post-loss claim, "[e]ven when an insurance policy contains a provision barring assignment of the policy ...." One Call Prop. Servs. Inc. v. Sec. First Ins. Co., 165 So. 3d 749, 753 (Fla. 4th DCA 2015) (collecting cases); cf. Accident Cleaners, Inc., 186 So. 3d at 2–3 (same). Thus, "[i]t is well settled under Florida law that provisions in insurance contracts requiring consent to assignment do not apply to assignment after the loss, and that an assignee has a common-law right to sue on a breach of contract claim." See CMR Constr. and Roofing, LLC v. Empire Indem. Ins. Co., No. 2:18-cv-779-FtM-99UAM, 2019 WL 2281678, at *3 (M.D. Fla. May 29, 2019) (emphasis added) (applying Florida law).

Turning to Florida's common law right for an insured to assign its benefits under a policy after experiencing a loss, Florida courts have emphasized that the post-loss assignment does not...